European businesses urged to get into Asia
JAKARTA (JP): European businesses were encouraged yesterday to increase participation in the development of infrastructure and small and medium enterprises (SMEs) in Asia.
President Soeharto, at the opening of a three-day Asia Europe Business Conference yesterday, said there was an urgent need to develop SMEs in Asia, Indonesia in particular, because their development would have a direct impact on people's welfare.
He asked conference participants to come up with ideas and recommendations on how to increase SMEs' market access, technology and capital.
"The growth of small enterprises will be beneficial to medium- sized enterprises and the latter's growth will open new business opportunities to big businesses," he said.
Hirokazu Nakamura, chairman of the board of Mitsubishi Motors Corp, said yesterday that a key to raising the competitive strength of SMEs was to let them cooperate with each other.
"SMEs are brimming with entrepreneurial spirit. Usually, if there is a business opportunity, they have the strength to seize it without leaning on others. But because of their small scale, they are sometimes placed in a disadvantageous position," Nakamura said.
He said the situation led to a need for support from the government and large corporate clients in the areas of finance, taxation, information supply and technology assistance.
This was particularly important in the case of developing countries, he added.
"It is also necessary to give consideration to the fostering of SMEs in the area of trade policy," Nakamura added.
The conference, a follow-up of the first Asia-Europe Meeting (ASEM) held last year in Bangkok, is discussing the development of SMEs, trade, investment and infrastructure facilities; the direction of Asia-Europe cooperation in the future; and business matchmaking.
Speakers scheduled for today's plenary sessions include Prof. Tommy Koh of Singapore's ministry of foreign affairs and executive director of the Asia-Europe Foundation; and Sir Charles Powel, director of Jardine Matheson Holdings and former foreign affairs and defense advisor to former United Kingdom Prime Minister Margaret Thatcher and John Major.
Soeharto said yesterday that Asia, and Indonesia in particular, needed more infrastructure.
"Economic relations between Asia and Europe depend on the availability of adequate infrastructure in both regions ... Infrastructure development in a number of Asian and European countries is also a profitable business opportunity," he said.
The Indonesian Chamber of Commerce and Industry chairman, Aburizal Bakrie, told the meeting that infrastructure development played a critical role not only in spurting economic growth but in promoting strategic alliance as well.
The World Bank has estimated that the global need for infrastructure investment in the next 10 years (1995 to 2004) would reach around US$1.5 trillion, including $600 billion for transportation, $490 billion for energy, $250 billion for telecommunications and $150 billion for water supply and sewerage.
Aburizal said the critical issue regarding infrastructure development in Asia was the fact that both the public and private sectors' access to investment funds was far less than demand.
"So far the public sector in Asia has managed to mobilize funds amounting to only $85 billion," he said. Meanwhile, private sector involvement in ongoing infrastructure projects in Asia reached only 10 percent of their total value.
"This shows that countries in Asia not only lack infrastructure, but are also inefficient and inept at carrying out such projects," he said.
"Asian governments are not financially able to provide for the huge infrastructure needs, and the involvement of the private sector is limited," he said.
The situation, he said, allowed strategic alliances between Asian and European businesses.
EU exports to Asia increased from $81.3 billion in 1989 to $178.05 billion in 1995, while imports increased from $126.58 billion to $219.3 billion in the same period.
The highest sectoral growth of exports to the EU was in manufacturing, growing at nearly 22 percent per annum over the 1970/1992 period.
Among the slowest-growing sector was agriculture.
"The reason for this slow growth is lack of familiarity. Asian agro-based products have long been perceived in Europe as having low quality and as being a threat to national production," Aburizal said. (pwn)
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